Lexpert magazine features articles and columns on developments in legal practice management, deals and lawsuits of interest in Canada, the law and business issues of interest to legal professionals and businesses that purchase legal services.
Issue link: https://digital.carswellmedia.com/i/654294
16 LEXPERT MAGAZINE | JANUARY 2013 UP FRONT FROM ALL APPEARANCES, the vot- ing recommendation guidelines issued by proxy advisory firm Institutional Share- holder Services (ISS) and Glass Lewis for 2013 will continue to fuel the proliferation of proxy battles that have this year marked Canada's corporate landscape. The guidelines, which apply to votes held after February 1, 2013, by TSX and TSX-V issuers, signal that ISS Canada will no longer support slate ballots of any kind. "This recommendation reflects re- cent TSX policy and means that the mere existence of a slate ballot will result in a withhold recommendation," says Victor Li, Senior Director of Proxy Analytics at Kingsdale Shareholder Services Inc., a proxy solicitation firm. Li has little doubt the no-slate guideline will promote proxy battles. "Activists will be able to target individual shareholders without even putting up their own candi- dates," Li says. "If a majority of sharehold- ers withhold their votes, the board will be under a lot of pressure, whether or not the company has a majority-voting policy." That's because majority-voting policies require that directors tender their resigna- tions in the event of an adverse result. And while the TSX is not forcing all issuers to adopt majority voting, it does require com- panies who eschew it to disclose their rea- soning. "A successful 'vote no' campaign is an embarrassment for the company either way, because there are no valid reasons for refusing to adopt majority voting," Li says. In 2012, Jaguar Mining, a company with a majority-voting policy, became the first Canadian issuer to experience a successful "vote no" campaign, when activists voted down three directors. All three tendered their resignation; the board accepted two. Adding to the pressure is the announce- ment by Glass Lewis, another influential proxy advisor, that it would recommend withholding votes from all members of the governance committee in cases where a company on the S&P/TSX Composite in- dex had not adopted majority voting. Walied Soliman, Co-Chair of Norton Rose Canada LLP's special situations team, which focuses on activist and defence man- dates, is concerned that the general tenor of recommendations from proxy advisory firms will make it difficult for directors to do their jobs properly. "There has been a trend to using more and more subjective criteria to assess directors," Soliman says. "That makes it difficult for directors to deal with risk-based decisions without fear of running afoul of organizations like ISS and Glass Lewis." ISS Rejects Slate Ballots Proxy advisors are tightening their guidelines on majority voting BY JULIUS MELNITZER AS CANADA BECOMES a global leader in infrastructure projects based on private-public partnerships (P3s), a distinct P3 Bar has emerged, combining legal skills from commercial real estate, construction, project finance and municipal land use. "Much of the P3 work has been big projects, so it tends to be feast or famine," says Dana Porter, co-head of the public- private partnership / infrastructure group at Stikeman Elliott LLP. "You staff up and do it, but then you have downtime between deals." One quirk of this burgeoning practice area is the fact that P3 lawyers are not as limited as other lawyers to their home jurisdiction. "It's not uncommon for a BC lawyer to work on a financing for an Ontario hospital deal, for instance," says Porter. "e way the deals are structured [among provinces] is very similar, the doc- umentation is very similar and the clients are very similar." While several law firms that are already active in the P3 market can be expected to grow their practices, barriers for entry may be high. "I don't expect to see new legal players coming into the market, except possibly through mergers," says Tobor Emakpor, a partner in the construction and infrastructure specialty group at Os- ler, Hoskin & Harcourt LLP. Porter sees a boom in P3 projects for 2013 and beyond, especially in the Greater SWAYING THE MASSES: A Telus shareholder keys in his vote at the annual general meeting P3 Boom Drives Legal Specialization Increased involvement of municipalities will spur activity in the sector, but barriers to entry may be high BY SHELDON GORDON PHOTO: REUTERS